Stimulus Hopes Test Downtrend Resistance as Bulls Eye Breakout
Chinese policymakers have unveiled another round of measures aimed at boosting sentiment and valuations in mainland stock markets, pushing insurers and state pension funds to increase future allocations.
Who knows whether it will work—the headlines are essentially recycled with a bit of extra detail. Previous stimulus attempts have also fizzled fast, as the price action over the past six months shows. But the announcement is timely, providing a catalyst to spark a bullish breakout.
A50 futures sit at an interesting juncture, sandwiched between downtrend resistance dating back to October’s stimulus euphoria and the critical 200-day moving average.
The price has already taken a couple of looks above the downtrend only to reverse back lower, including earlier Thursday after the details of the plan were released.
However, given the risk state funds may be ordered to buy to drum up excitement among retail investors, it will be interesting to see whether we see a rally into the close.
If we do and the price closes above the downtrend, one setup to consider would be to buy targeting 13200/50-day moving average, 13727, or even the double-top of 14366 set late last year.
Depending on your target and risk tolerance, a stop could be placed beneath the downtrend or 200-day moving average for protection.
Momentum indicators have turned bullish, potentially improving the probability of a breakout sticking.
Good luck!
DS
Who knows whether it will work—the headlines are essentially recycled with a bit of extra detail. Previous stimulus attempts have also fizzled fast, as the price action over the past six months shows. But the announcement is timely, providing a catalyst to spark a bullish breakout.
A50 futures sit at an interesting juncture, sandwiched between downtrend resistance dating back to October’s stimulus euphoria and the critical 200-day moving average.
The price has already taken a couple of looks above the downtrend only to reverse back lower, including earlier Thursday after the details of the plan were released.
However, given the risk state funds may be ordered to buy to drum up excitement among retail investors, it will be interesting to see whether we see a rally into the close.
If we do and the price closes above the downtrend, one setup to consider would be to buy targeting 13200/50-day moving average, 13727, or even the double-top of 14366 set late last year.
Depending on your target and risk tolerance, a stop could be placed beneath the downtrend or 200-day moving average for protection.
Momentum indicators have turned bullish, potentially improving the probability of a breakout sticking.
Good luck!
DS
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.